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Wednesday, 3 September 2014

The Way Is Not Shut

Another day of dramatic seeming action with only a small final move on the daily close yesterday, marking a fifth day of consolidation since SPX made the 2005 high. The channel support trendline on WLSH and the megaphone support trendline on Dow broke at the lows yesterday, so all the support trendlines from the August lows have now been broken. That could mark a high being made right here, but the prospects for a move to primary resistance in the 2020-30 look pretty good unless bears can put a whole day together and break the current sequence of higher highs and lows on SPX. SPX daily chart:

I've marked this consolidation as a flag on the daily chart, but on the 60min chart the low yesterday confirmed that this consolidation has been forming an ascending triangle. These break up 70% of the time and the target on a break up here would be the 2019.5 area, bringing SPX to the start of my 2020-30 strong resistance zone. I'd note here that a possible larger rising channel may have established on SPX at the last low, and if SPX can break through that 2020-30 resistance area then I'd be looking further at that possible new channel for the next resistance above. I have that rising channel resistance in the 2035 area at the moment. SPX 60min chart:

TLT is chugging along nicely in the 2014 rising channel. I have a shorter term rising channel within that overall channel and I have short term support there just under 116. That would make an interesting long entry for the next move up to 120 that I'm expecting after the current retracement ends. TLT daily chart:

The rally on WTIC / CL failed at 96, slightly under the 96.5 target I gave last week. I'm expecting this next move down to reach my ideal 90.5 to 91.24 target range. WTIC daily chart:

ES spiked as high as 2011 on Ukraine news overnight before the news was dismissed as unfounded. Obviously that happens a lot. The good news is that SPX has a decent chance of gapping over triangle resistance at the open and, as long as any downside is limited to a gap fill, then I'll be looking for the triangle target at 2019.5 to be made this week and possibly today. Key short term support is at the 50 hour MA, now at 1998, and any break below that would warn that this triangle may in fact take the 30% option instead and break down. In the absence of that today should be kind to the bulls.

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